Short seller Jim Chanos sees big trouble brewing among leveraged natural-gas producers. Why he still views China as a bubble and is wary of Brazil's Petrobras and Vale, too.

Jim Chanos has made a very nice living and a big reputation out of seeing what others overlook, particularly when it comes to overvalued companies. The prominent short seller's big wins include sniffing out problems at Enron, Tyco, and WorldCom in the early 2000s before those companies imploded. Chanos figures that if he and his colleagues get two-thirds of their picks right, they are doing very well. This year, as equity markets have rallied, the two short funds he runs are down slightly, versus an 18% decline through November for short sellers tracked by the Dow Jones Credit Suisse Hedge Fund Index. Chanos, 55...